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Should the African lion learn from the Asian tigers? A comparative-historical study of FDI-oriented industrial policy in Ethiopia, South Korea and Taiwan

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  • Jostein Hauge

Abstract

Ethiopia’s economy has been growing at breakneck speed for well over a decade now, earning the nickname as Africa’s lion. In recent years, the development literature on Ethiopia has paid particular attention to the role of industrial policy, especially the ways in which the Ethiopian experience compares to that of the Asian tigers. But through this comparative-historical perspective, little attention has been devoted to an important aspect of industrial policy in Ethiopia – foreign direct investment (FDI) in the manufacturing sector. This paper compares FDI-oriented industrial policy in Ethiopia in the current era (particularly focusing on light manufacturing) to that of South Korea and Taiwan between 1960 and 1990, arguably the two most generalisable cases among the Asian tigers. The paper argues that FDI-oriented industrial policy in Ethiopia seems to be bringing about short-term economic benefits, and is showing promise for further industrialisation. At the same time, it could benefit from taking more lessons from the long-term economic development perspective that characterised South Korea’s and Taiwan’s approach to FDI. Such a long-term perspective most importantly includes pro-active strategies to transfer technology from foreign firms to the domestic economy and the creation of backward linkages from foreign to domestic firms.

Suggested Citation

  • Jostein Hauge, 2019. "Should the African lion learn from the Asian tigers? A comparative-historical study of FDI-oriented industrial policy in Ethiopia, South Korea and Taiwan," Third World Quarterly, Taylor & Francis Journals, vol. 40(11), pages 2071-2091, November.
  • Handle: RePEc:taf:ctwqxx:v:40:y:2019:i:11:p:2071-2091
    DOI: 10.1080/01436597.2019.1629816
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    Cited by:

    1. Guendalina Anzolin, 2021. "Automation and its Employment Effects: A Literature Review of Automotive and Garment Sectors," JRC Working Papers on Labour, Education and Technology 2021-16, Joint Research Centre.
    2. Gruber, Aaron, 2023. "Navigating a world of constraints: Developmentalism, industrial policy, and the limits to structural transformation in Ethiopia," ÖFSE-Forum, Austrian Foundation for Development Research (ÖFSE), volume 87, number 287748.
    3. Ingrid Harvold Kvangraven, 2021. "Beyond the Stereotype: Restating the Relevance of the Dependency Research Programme," Development and Change, International Institute of Social Studies, vol. 52(1), pages 76-112, January.
    4. Emmanuel Mensah & Solomon Owusu & Neil Foster-McGregor & Adam Szirmai, 2023. "Structural Change, Productivity Growth and Labour Market Turbulence in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 32(3), pages 175-208.
    5. Ana Cristina Alves & Celia Lee, 2022. "Knowledge Transfer in the Global South: Reusing or Creating Knowledge in China’s Special Economic Zones in Ethiopia and Cambodia?," Global Policy, London School of Economics and Political Science, vol. 13(S1), pages 45-57, April.
    6. Jostein Hauge, 2020. "Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan," The World Economy, Wiley Blackwell, vol. 43(8), pages 2070-2092, August.
    7. Nick Vink, 2022. "African agricultural development: How are we contributing?," Agricultural Economics, International Association of Agricultural Economists, vol. 53(4), pages 540-562, July.

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